Reiable Concrete Works Limited v Commissioner of Domestic Taxes [2024] KETAT 1549 (KLR)

Reiable Concrete Works Limited v Commissioner of Domestic Taxes (Tax Appeal E1066 of 2024) [2024] KETAT 1549 (KLR) (8 November 2024) (Ruling)

Neutral citation: [2024] KETAT 1549 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E1066 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

November 8, 2024

Between

Reiable Concrete Works Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

Background 1. The Applicant moved this Tribunal vide a Notice of Motion dated 24th September 2024 and filed on 25th September 2024 sought the following Orders:i.That pending inter-parties hearing and determination of this application this Tribunal be pleased to set aside whole additional assessment of the Respondent totaling to Kshs. 8,858,619. 90 exclusive of penalties and interest.ii.That this Tribunal be pleased to grant the Applicant leave to file the Appeal out of time against the whole income tax additional assessment of the Respondent totalling to Kshs. 8,858,619. 90 exclusive of penalties and interest.iii.That in line with prayer 2 above, the draft Memorandum of Appeal annexed herewith be deemed as duly filed and served.iv.That this Tribunal be pleased to make any order that it deems fit and just.v.That costs of this Application be on cause.

Grounds for the Application 2. The application is based on the following grounds as outlined in an Affidavit sworn by Mwangi Mucemi, on 24th September 2024:i.That the statutory timeline to lodge an Appeal with the Tribunal has lapsed and further during the time to lodge an appeal the Applicant was unwell and critically sick.ii.That the Applicant was not aware of the notice for objection application of the additional assessment thus it was based on what is totally erroneous.iii.That if this application is allowed, the Respondent will not be prejudiced as taxes being demanded are erroneous and grossly exaggerated.iv.That it is in the interest of justice that this Honourable Tribunal determines this matter.

3. The Respondent upon being served with the instant Application did not file any response to the application, the Application is therefore unopposed.

4. Neither party filed written submissions on or before 14th October, 2024 as directed by the Tribunal on 3rd October, 2024.

Analysis And Findings 5. This Application seeks an order for the extension of time for filing of the appeal out of time and the annexed Memorandum of Appeal be deemed as properly filed. The Tribunal stands guided by the following principles as set out in the case John Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, 1984 referred to by the judges in the case of Wasike V Swala [1984] KLR 591, Sammy Mwangi Kiriethe & 2 others v Kenya Commercial Bank Ltd (supra) and Section 13 of the Tax Appeals Tribunal Act, 2013 in establishing whether the Applicant deserved prayers sought:a.Whether there is a reasonable cause for the delay?b.Whether the appeal is merited?c.Whether the application for extension has been brought without undue delay?d.Whether there will be prejudice suffered by the Respondent if the extension is granted?

5. The Applicant premised its application on the provisions of Section 13 (3) and (4) of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) as read in tandem with the provisions of Rule 10 (1), (2) and (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, which provides as follows:“(1)Where the documents referred to in rule 3 (2) are not filed within the time specified therein, the Tribunal may, upon for submitting application in writing, extend the time for submitting the documents.(2)An application for extension of time referred to in rule 10(1) shall be-(a)supported by an affidavit stating reasons why the applicant was unable to submit the documents in time.(b)served on the respondent by the applicant within two days of filing with the clerk.”“(3)The Tribunal may grant the extension of time if it is satisfied that the applicant was unable to submit the documents in time for the following reasons-(a)absence from Kenya;(b)sickness; or(c)any other reasonable cause.”

6. The Applicant submitted that on 29th August 2017 its director was involved in a road accident , was critically injured and incapacitated for a long period. The Application is therefore based on the grounds outlined pursuant to the provisions of Section 13 (4) of the TATA and Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015.

7. The Tribunal upon perusal of the documents provided sighted a certificate of examination and test of vehicle, accident assessors report and a medical report in support of the Applicant’s averments all of which indicated that the Applicant was unable to discharge his duties because of the accident. The medical note issued to the Applicant from Notre Dame Medical Centre dated 11th January 2023 indicated that the Applicant had been undergoing treatment since 2017.

8. The Tribunal notes that Applicant herein has presented an objection decision from the Respondent dated 16th December 2019 whereupon it had filed an appeal stating grounds of appeal. These grounds raise pertinent issues that form a basis of an arguable appeal.

9. The Tribunal notes that by failing to oppose the Application, the Respondent has not demonstrated the prejudice that would not be compensated by an award of penalties and interests on any principal tax ultimately found to be due and payable by the Applicant. However, the only just recourse available to the Applicant lies in an appeal to the Tribunal and the Applicant would be greatly prejudiced if the Orders sought in its Application are not granted.

10. Accordingly, the Tribunal is satisfied with the reason advanced by the Applicant and therefore finds in applying the guiding principles as outlined in paragraph 4 of this Ruling , there was a reasonable cause for delay since the director was incapacitated, second, the Appeal is merited and arguable and, third, the Application was brought without undue delay in view of the incapacitation of the director and the explanation and evidence adduced by the Applicant are reasonable to warrant the intervention by the Tribunal. The Tribunal also finds that the Respondent, will not be prejudiced if the Orders sought by the Applicant for extension of time are granted.

11. The Tribunal notes that the Applicant also sought an Order for the setting aside of the whole additional assessment of the Respondent totalling to Kshs. 8,858,619. 90 exclusive of penalties and interests, The Tribunal can only grant such an Order upon full hearing of the Appeal.

12. The upshot of the foregoing is that the Tribunal finds the Application to be meritorious, in part.

Disposition 13. Having found the Application to be partly meritorious the Tribunal proceeds to make the following Orders:a.The Application be and is hereby partially allowed.b.The Applicant be and is hereby granted leave to lodge its Appeal out of time.c.That the Applicant file and serve its Notice of Appeal, Memorandum of Appeal and Statement of Facts within 15 days of the date of this Ruling.d.The Respondent to file its response to the Appeal within 30 days of being served with the record of Appeal.e.Each party to bear its own costs.

14. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 8TH DAY OF NOVEMBER, 2024. ………………………………….CHRISTINE A. MUGACHAIRPERSON…………………………BONIFACE K. TERERMEMBER…………………………ELISHAH N. NJERUMEMBER…………………………EUNICE N. NG’ANG’AMEMBER…………………………OLOLCHIKE S. SPENCERMEMBER